Question 1

Given the consumption schedule, it is possible to graph the relevant saving schedule by:

Accepted Answer

A)  subtracting the MPC from "one" at each level of income.
B)  subtracting investment from consumption at each level of GDP.
C)  plotting the horizontal differences between the consumption schedule and the 45-degree line.
D)  plotting the vertical differences between the consumption schedule and the 45-degree line.

Question 2

The multiplier:

Accepted Answer

A)  varies directly with the slope of the investment-demand schedule.
B)  is unrelated to the slope of the saving schedule.
C)  will be greater, the smaller the slope of the saving schedule.
D)  will be greater, the steeper the slope of the saving schedule.

Question 3

As aggregate income decreases, the APC:

Accepted Answer

A)  and APS will both increase.
B)  will decrease, but the APS will increase.
C)  will increase, but the APS will decrease.
D)  and APS will both decrease.

Question 4

Assume that for the entire business sector of the economy there is $0 worth of investment projects which will yield an expected rate of return of 25 percent or more.But there are $15 worth of investments which will yield an expected rate of return of 20-25 percent; another $15 with an expected rate of return of 15-20 percent; and similarly an additional $15 of investment projects in each successive rate of return range down to and including the 0-5 percent range.Refer to the above information.The expected rate of return curve:

Accepted Answer

A)  shows a direct relationship between the interest rate and investment.
B)  is also the investment-demand curve.
C)  is indeterminate.
D)  cannot be calculated without knowing the level of saving.

Question 5

If the net expected revenue from an investment is low, then the investment demand curve of an economy will:

Accepted Answer

A)  shift to the left.
B)  shift to the right.
C)  become vertical.
D)  become horizontal.

Question 6

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

Accepted Answer

A)  MPS in this economy is .4.
B)  MPC in this economy is .4.
C)  MPC in this economy is .3
D)  multiplier is 3.

Question 7

Which of the following equations represents the saving schedule implicit in the data below? d B) S = 40 + .4Yd C) S = 40 + .6Yd D) S = -40 + .4Yd" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  S = C - Yd
B)  S = 40 + .4Yd
C)  S = 40 + .6Yd
D)  S = -40 + .4Yd

Question 8

The APC can be defined as:

Accepted Answer

A)  change in consumption/change in income
B)  consumption/income
C)  change in income/change in consumption
D)  income/consumption

Question 9

The saving schedule shown in the diagram below would shift downward if, all else equal:

Accepted Answer

A)  the average propensity to save increased at each income level.
B)  the marginal propensity to save rose at each income level.
C)  consumer wealth rose rapidly because of a significant increase in stock market prices.
D)  the real interest rate increased.

Question 10

The above schedule indicates that if the real interest rate is 8 percent, then:

Accepted Answer

A)  we cannot tell what volume of investment will be profitable.
B)  $30 billion will be both saved and invested.
C)  $30 billion of investment will be undertaken.
D)  $60 billion of investment will be undertaken.

Question 11

For all levels of income to the left of the intersection of the 45-degree line and the consumption schedule, the APC is:

Accepted Answer

A)  greater than 100 percent.
B)  less than the APS.
C)  equal to the MPC.
D)  equal to 100 percent.

Question 12

A $1 billion increase in investment will cause a:

Accepted Answer

A)  (1/MPS)  billion increase in equilibrium GDP.
B)  (MPS)  billion increase in equilibrium GDP.
C)  (1 - MP
C)   billion increase in equilibrium GDP.
D)  (MPC - MPS)  billion increase in equilibrium GDP.

Question 13

If the Brown family's marginal propensity to consume is 0.70, then it will consume seven-tenths of its total income.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the data below.The MPS is:

Accepted Answer

A)  7/10.
B)  3/10.
C)  2/5.
D)  3/5.

Question 15

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.  Refer to the above data.The marginal propensity to save:

Accepted Answer

A)  is highest in economy (1) .
B)  is highest in economy (2) .
C)  is highest in economy (3) .
D)  cannot be determined from the data given.

Question 16

Suppose the consumption schedule is: C = 20 + .9Y, where C is consumption and Y is disposable income.Refer to the above data.The MPC is:

Accepted Answer

A)  .45.
B)  .20.
C)  .50.
D)  .90.

Question 17

If the MPS is only half as large as the MPC, the multiplier:

Accepted Answer

A)  is 2.
B)  is 3.
C)  is 4.
D)  cannot be determined from the information given.

Question 18

The 45-degree line on a chart relating consumption and income shows:

Accepted Answer

A)  all points where the MPC is constant.
B)  all points at which saving and income are equal.
C)  all the points at which consumption and income are equal.
D)  the amounts households will plan to save at each possible level of income.

Question 19

The consumption schedule relates:

Accepted Answer

A)  consumption to the level of disposable income.
B)  saving to the level of disposable income.
C)  disposable income to domestic income.
D)  consumption to saving.

Question 20

The simple multiplier is:

Accepted Answer

A)  1/APS.
B)  1/APC.
C)  1/MPC.
D)  1/MPS.

Exam 10: Part B: Basic Macroeconomic Relationships

The multiplier:

Correct Answer
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As aggregate income decreases, the APC:

Correct Answer
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Which of the following equations represents the saving schedule implicit in the data below?

Correct Answer
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If the net expected revenue from an investment is low, then the investment demand curve of an economy will:

Correct Answer
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The simple multiplier is:

Correct Answer
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Correct Answer
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For all levels of income to the left of the intersection of the 45-degree line and the consumption schedule, the APC is:

Correct Answer
verified

The consumption schedule relates:

Correct Answer
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If the Brown family's marginal propensity to consume is 0.70, then it will consume seven-tenths of its total income.

Correct Answer
verified

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.The marginal propensity to save:

Correct Answer
verified

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

Correct Answer
verified

If the MPS is only half as large as the MPC, the multiplier:

Correct Answer
verified

The APC can be defined as:

Correct Answer
verified

The saving schedule shown in the diagram below would shift downward if, all else equal:

Correct Answer
verified

The above schedule indicates that if the real interest rate is 8 percent, then:

Correct Answer
verified

Given the consumption schedule, it is possible to graph the relevant saving schedule by:

Correct Answer
verified

Suppose the consumption schedule is: C = 20 + .9Y, where C is consumption and Y is disposable income.Refer to the above data.The MPC is:

Correct Answer
verified

The 45-degree line on a chart relating consumption and income shows:

Correct Answer
verified

Refer to the data below.The MPS is:

Correct Answer
verified

A $1 billion increase in investment will cause a:

Correct Answer
verified

Exam 10: Part B: Basic Macroeconomic Relationships

The multiplier:

Correct AnswerverifiedShow Answer

As aggregate income decreases, the APC:

Correct AnswerverifiedShow Answer

Which of the following equations represents the saving schedule implicit in the data below?

Correct AnswerverifiedShow Answer

If the net expected revenue from an investment is low, then the investment demand curve of an economy will:

Correct AnswerverifiedShow Answer

The simple multiplier is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For all levels of income to the left of the intersection of the 45-degree line and the consumption schedule, the APC is:

Correct AnswerverifiedShow Answer

The consumption schedule relates:

Correct AnswerverifiedShow Answer

If the Brown family's marginal propensity to consume is 0.70, then it will consume seven-tenths of its total income.

Correct AnswerverifiedShow Answer

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars. Refer to the above data.The marginal propensity to save:

Correct AnswerverifiedShow Answer

Suppose the government finds it can increase equilibrium real GDP by $45 billion by increasing government purchases by $18 billion.On the basis of this information we can say that the:

Correct AnswerverifiedShow Answer

If the MPS is only half as large as the MPC, the multiplier:

Correct AnswerverifiedShow Answer

The APC can be defined as:

Correct AnswerverifiedShow Answer

The saving schedule shown in the diagram below would shift downward if, all else equal:

Correct AnswerverifiedShow Answer

The above schedule indicates that if the real interest rate is 8 percent, then:

Correct AnswerverifiedShow Answer

Given the consumption schedule, it is possible to graph the relevant saving schedule by:

Correct AnswerverifiedShow Answer

Suppose the consumption schedule is: C = 20 + .9Y, where C is consumption and Y is disposable income.Refer to the above data.The MPC is:

Correct AnswerverifiedShow Answer

The 45-degree line on a chart relating consumption and income shows:

Correct AnswerverifiedShow Answer

Refer to the data below.The MPS is:

Correct AnswerverifiedShow Answer

A $1 billion increase in investment will cause a:

Correct AnswerverifiedShow Answer

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